Runners-up to Timothy D. Cook on the list of top-paid C.E.O.'s are, from left, Lawrence Ellison of Oracle, Ronald Johnson of J. C. Penney and Philippe Dauman of Viacom. Together, their pay was still less than half of Mr. Cook's.
IS any C.E.O. worth $1 million a day?
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That’s roughly $42,000 an hour. Or $700 a minute. Or $12 a second.
Think of it this way: In the time it took to read those words, you could’ve pocketed $100. Finish this article and — well, you do the math.
At Apple, the answer to that question is an emphatic yes, and then some. Not since Steve Jobs has a chief executive at Apple, or any other public American corporation, for that matter, been as richly rewarded in stock as Timothy D. Cook, who succeeded Mr. Jobs as chief executive last August, a few months before Mr. Jobs died.
Mr. Cook was paid a cash salary of roughly $900,000 in 2011. On its own, that would have been a ho-hum paycheck for a top American C.E.O. in recent years.
But then came a wild extra, a one-time award, in the form of Apple stock. It was initially worth a staggering $376.2 million. As of the end of last week, it was valued at roughly $634 million, reflecting Apple’s soaring share price.
Many credit Mr. Cook, along with Mr. Jobs, for Apple’s recent success. And the company is quick to note that Mr. Cook’s pay package extends over 10 years. One-half of his stock is scheduled to vest in 2016, and the other in 2021, provided that Mr. Cook still works for Apple. And, at a time when some investors seethe over far smaller paychecks — a mere eight figures is relatively commonplace for top chief executives these days — Apple’s shareholders are hardly up in arms over the magnitude of Mr. Cook’s reward. To the contrary, a vast majority voted in favor of it.
Of course, most of us can’t begin to wrap our heads around pay figures like these. An American with a bachelor’s degree, after all, typically makes $2.3 million, not in a year, but over a lifetime, according to a recent study from Georgetown University.
Data on C.E.O. compensation in 2011, albeit preliminary, confirm what many of us already know: the top brass generally do much, much better than the rest of us, whether times are good or bad. After the ups and downs of the recent boom-bust years, pay among the 100 best-paid chief executives at big American corporations held fairly steady in 2011, according to Equilar, which reviewed C.E.O. compensation for The New York Times. Here are some numbers worth knowing:
• Among the 100 top-paid C.E.O.s, overall pay last year rose a scant 2 percent from 2010.
• The median chief executive in this group took home $14.4 million — compared with the average annual American salary of $45,230.
• In all, the combined compensation of these 100 C.E.O.s totaled $2.1 billion, the rough equivalent of the estimated annual economic output of Sierra Leone.
The full picture won’t become clear until June or so, when corporate proxy statements will detail the full range of executive compensation. But data available as of March 30 suggests that a new elite is emerging in corporate America: C.E.O.’s who make $10 million-plus a year.
Granted, these are chief executives of publicly traded companies, the kind of businesses anyone can buy into on the stock market. Next to pay in the rarefied realms of private American capitalism — the multitrillion-dollar world of hedge funds, private equity and the like — these C.E.O.’s might seem like pikers. Top hedge fund managers collectively earned $14.4 billion last year.
But the Equilar figures also hint at the myriad ways executive compensation is as tailored as a bespoke suit. It is those custom details — the one-off huge stock grants, in Mr. Cook’s case, the token $1 annual salaries or evaporating bonuses in others — that can turn dull proxy statements into page-turners.
Mr. Cook is an extreme example of this phenomenon. He is, experts agree, an outlier — the only chief executive on the Equilar list to pull down a nine-figure paycheck. His stock award was so valuable, even at its initial price, that his total compensation eclipsed that of the next nine C.E.O.’s combined. Those nine included Lawrence J. Ellison of Oracle, at $77.6 million, a perennial on the best-paid list, and Philippe P. Dauman, of Viacom, at $43.1 million.
Aaron Boyd, the director of research at Equilar, the executive compensation data firm based in Redwood City, Calif., that has reviewed executive compensation trends annually for Sunday Business, said Mr. Cook’s pay was unique.
“The amount he got was historic to such a degree that it skews the numbers,” Mr. Boyd said.
BUT Apple was not the only special case. Consider J. C. Penney, whose new chief executive, Ronald B. Johnson, came in third on the top 100 list, with total compensation of $53.3 million.
Why? Last year, Mr. Johnson left his position as senior vice president of retail at Apple, along with Apple stock worth $101 million at the time that had not yet vested. So, as part of his pay package, J.C. Penney gave Mr. Johnson a one-time stock award worth $52.6 million. (As of the end of last week, his Apple stock would have been worth about $159 million. His Penney stock was worth $58 million.)
Last year’s other top earners included Stephen I. Chazen ($31.7 million) of Occidental Petroleum; Gregory Q. Brown ($29.3 million) of Motorola Solutions, and Howard D. Schultz ($16.1 million) of Starbucks.
Analysts say the uptick in C.E.O. pay is a sign that corporations are returning to business as usual after the last recession. When the economy soured, executive pay fell sharply at many companies, though not as much as many ordinary Americans might have hoped. With the recovery in 2010, pay then skyrocketed. Now it’s stabilizing, suggesting, perhaps, that corporate boards see more predictable economic times ahead.
“On average, pay levels have moderated,” said Doug Friske, the global head of executive compensation consulting at Towers Watson, a human resource consulting firm in New York. “Now we are seeing normalization.”
Corporate boards also seem to be acknowledging criticism of executive pay from shareholders and the public. Some companies have reduced discretionary bonuses and linked executive pay more closely to performance metrics like revenue and share price. Last year, companies also began to hold shareholder votes on executive pay packages, so-called “say on pay” polls required by Dodd-Frank, the Wall Street reform law.
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